Home alterations are booming in Auckland, the Waikato and Christchurch but slow in Wellington

Greg,

Your articles are so biased they're ridiculous.  You talk of rising rents and now, "the booming housing market is spilling into home renovations..."

What booming housing market? 

I challenge you to come to the B&T auctions tomorrow morning at 10.30am.  If the room is only half full (as i strongly suggest it will be) then how about you write an article which reflects what is actually happening in the property market NOW.  

Triple, the truth is good stock is selling for rediculous money, I too get fed stats from agents on a regular basis, many examples of auctions going for $100,000's above expected reserves. In regards to rent, maybe your wife is not up to the job and the landlords she works for should look for a more capable property manager? Just saying...

Brenda,

i hear this exact rubbish from agents all day long ..."oh good proerties get good money."  Well the market is not just judged on good properties it's judged on the COMPLETE MARKET.

If everything is so great then you explain to me BRENDA why are the B&T auction rooms only half full now???

And my wife has been offered jobs from all the agencies in the Bays because she is very good at her job.  She just gets sick of dealing with landlords who think they can get more rent than their property is worth.

.......and when she lists too high like they request, the property just sits there vacant until the landlord accepts the asking price must be reduced.

If you are more experienced than she is in rentals, then may i ask how many residential properties you currently own or manage? 

Triple, I think you are just too negative to see the good returns available when investing in property. I have several rental properties across Auckland. Rents have been increasing steadily over the last few years. One expample is a 2 bed unit in Henderson, I purchased in 2009. Rent was $300 per week. Increases occured each year since then and now rent is $385. This is typical across my portfolio. oh and yes interest rates are good too. I signed up a very large amount of money for 5.99% for three years and the bank paid me $3,500 cash to do so. That was just 4 weeks ago. oh and yes capital growth has been strong now for three to four years around 10% compounding in Auckland. Yes I have noticed B&T auctions not so fill now but last year it was a frenzie, now I would call it steady. I think mid winter and election year have slowed things down a little but prices are still rising. 

Appreciating Assets, I've owned and invested in property (both commercial and tenanted residential), for over 20 years.  I realise the potential benfits of property ownership. 

But this is the current reality in my opinion - returns (i.e. yield) and household incomes have become completely divorced from property prices.  The numbers simply don't make sense - unless you have overseas investors throwing their money mindlessly at auctions continually pumping the sale prices up.  I try to attend the auctions every week and i do not see the same investors frantically buying everything like last year.  So that part of the equation appears to have changed. 

I think prices are beginning to soften. 

If prices softening results in say price growth droping from 10% to lets say 5%, it is still a good asset to own becasuse the mortgage I have that paid for the house does not increase, so I am still gaining all the way. If prices growth goes negative then its a good time for me buy a few more properties.

I agree to a certain extent - but you are accepting the key driver here is capital gain, not return.  Most investors go interest only and seek a doubling every 10 years (that requires a 10% capital gain on average each year). 

If you can hang on if prices fall or flat line for a number of years then you'll probably be ok.  And i also agree that there may be some great buys coming - i'm just not sure whether this will be later this year or in a couple of years when higher rates really bite.

My point is - the market is no longer booming.  And for those investors who think prices can't fall they should seek advice from those that held property during the 87' crash. Some prices fell between 25 to 50%.  Admittedly they bounced back in 94' but by then many people had been financially wiped out which led to desperation and in some cases even suicide.

On a different note, I would also like to see our future generations get a fair go at owning a family home.  In my opinion this requires a correction.  I think the market is overcooked.  The only winners at the moment are the banks.